financing: not for the faint of heart

Before you can start looking for a property in earnest, you need to have your financing pretty much in order. That means, you need to find a reputable lender and put your soul on the line for their money.

The lending climate now, after the whole sub-prime mortgage fiasco and Baer Stearns shit hit the fan, is testy. It's not impossible to get a loan, but the restrictions are much, much tougher than they were a year ago. I am self-employed, which makes it even trickier to get a loan (for those of you who have an employer, your income is based on your net income, before taxes... but if you're self-employed, they consider only your gross income, after taxes and business writeoffs have been factored in). But still, like I said, it's not impossible.

The lender will run your credit report. If you're shopping for a loan, which you should do, it's not a good idea to allow every lender to pull your credit! Each time your credit report is pulled, your scores drop a teensy bit. So, do your shopping, find a lender you want to work with, and then allow that lender to pull your credit.

The lender will also want to see proof of income. For me (probably because of the self-employment thing), this meant providing copies of my tax returns for the previous three years. They'll want to see proof of any other income or assets you may have, as well... IRAs, stock portfolios, bank statements from your savings account.

In this current economic climate, it is nearly impossible to find a reputable lender willing to give you a loan unless you have a significant cash down-payment of at least 10, but preferably 20%... in addition to being able to show you have extra money sitting in savings as a cushion. This last piece came as a surprise to me. The bank wants to know for sure that if "everything goes to shit" (direct quote from my loan officer), you still have funds to draw from to pay your mortgage. Again, this may be an extra precaution that they take for us lucky self-employed people. Just be prepared for a wake-up call when you hear the final numbers.

Happy shopping!

open house adventure

Today was a good day for an open house excursion, so I looked on Craigslist, found a few contenders, and drove around North and Northeast Portland on a house-hop.

Things I learned: Photographs lie. And so do desperate realtors. A house that looks okay on RMLS, and is described like this: "adorable remodeled bungalow, wonderful floorplan, a gardener's delight! Great location! Needs special owner."... would more accurately be described as such: "Using the cheapest and ugliest materials available, the previous owners slapped down some pergo flooring and slopped taupe paint on the walls of this shoebox, which sits against the on-ramp to I-5. If you are four feet tall, are unable to perceive odors, and are blind, this house may be a perfect fit!"

I saw six houses, and they all weren't so bad, but some of them really were.

Other tips (I promise they won't be so laden with sarcasm):
* Before you see an open house, it's a good idea to be working with a realtor. Or, at the very least, be prepared to say you are. Otherwise, expect the listing agent to court you. Many agents will ask you to sign the sign-in sheet, and give them your personal information (phone number, address, etc.) I politely declined, and, in the case of a particularly pushy listing agent, left a fake name and contact info. (It can be fun to make up a house-hunting altar-ego.)

* Ask educated questions, but play it cool. How old is the furnace? When did they have the roof replaced? Are all of the bedrooms egressed? Ask about insulation. If you really, really love a property, try to avoid screeching gleefully within earshot of the listing agent. (But by all means, call your buyer's agent immediately and go for a viewing with them.)

* Pay attention. Is the neighbor's dog barking incessantly? Can you hear people yelling from across the street? Are you so taken by the fireplace that you ignore the water damage on the ceiling? What is the condition of the windows? Does the listing agent seem like a genuinely nice person, or a phony? What would it be like to maneuver in the kitchen? Are the improvements you'd like to make on the place something you can do yourself, or would they require expensive renovations? Figure out what matters to you, and whether this place has your kind of vibe.

Open houses are a great educational tool for any potential homebuyer, because they give a sense of how much house you can expect to buy at a certain price range in a certain neighborhood. If you, like me, are working with a limited budget, expect that you might feel somewhat let down by the reality of what you see. I have an image of the sort of place I'd like to find, and even though three months ago, at the onset of my house-hunting, I didn't think my expectations were very high, I have learned that I will need to lower the bar a little. And that's okay, I am letting some of my "needs" go, and holding on to other ideals that I'm not willing to compromise on.

Remember, this is a process (this is what I'm telling myself over and over again, when I tire and lose patience). Soon, you'll have your own little house full of character and error and quirks and imperfections, just like you.

hi there.

So, this is my new blog. Welcome! I'm not sure, just yet, how it will begin to unfold, but my intention is to chronicle my foray into the homebuying process so that:
a.) I can remember what happened after it's over (when, presumably, I am happily ensconced in a cute little bungalow)
and
b.) I can share what I'm learning along the way.*

Stay tuned.

* In case you are wondering, "why should I listen to any of this girl's advice?"... I will tell you this: you should not. I have no experience whatsoever with this process. That's a giant disclaimer! I took a class for first-time homebuyers at the Portland Housing Center, have read a few books, and have talked to a lot of people about their own experiences. Even though I love to give advice, and I have good intentions, I don't know what the hell I'm doing. I make mistakes all the freaking time! I assure you, I'll make mistakes before I cross the doorstep of my new abode, and I will tell you all about them. So don't listen to me. Find your own way, just as I'm finding mine.